Lenovo Group said on Wednesday that it had entered into an agreement with a unit of Saudi Arabia's sovereign wealth fund to issue $2 billion worth of bonds, and will set up a new manufacturing facility in the Middle East to further expand its global presence.

The move came as the global PC market is expected to record bigger growth amid the latest artificial intelligence boom and greater digital economy opportunities in the Middle East region.

Lenovo said it entered a deal with Alat, a unit of the Saudi Arabian Public Investment fund, under which it will issue $2 billion worth of zero-coupon convertible bonds to the unit. The bonds are interest-free and will be repayable in three years.

The two firms have also entered into a "strategic collaboration," under which Lenovo will set up a Middle East headquarters and also establish a new PC and server manufacturing facility in Saudi Arabia, with assistance from Alat.

Yang Yuanqing, chairman and CEO of Lenovo, said: "Through this strategic collaboration, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in the Middle East and Africa region."

"Looking ahead, Lenovo plans to build a tech and manufacturing hub in Saudi Arabia and will help define the future of the region as a center of innovation which Alat will benefit from," Yang said.

The Middle East and Africa region continues to see strong growth momentum fueled by an increasing number of large-capital projects and its strong economies, with the region's IT and business services market size expected to reach $38.1 billion by 2027, up from $30.3 billion in 2023, according to data from market research company International Data Corp.

Lenovo said the new PC and server manufacturing facility in Saudi Arabia will help extend the company's existing global footprint, which already includes more than 30 manufacturing sites around the world spanning Argentina, Brazil, China, Germany, Hungary, India, Japan, Mexico and the United States.

To date, Lenovo and Saudi Arabia have reached extensive cooperation in areas such as high-performance computing, education, e-sports, biotechnology, and sports, according to the Chinese tech company.

Lenovo said it currently has about 300 employees in the Middle East and Africa region, with its largest office in the region located in Dubai, United Arab Emirates, employing about 150 people.

The latest collaboration came as AI PCs are expected to spur the growth of the global consumer electronics market.

Morgan Stanley said in a research note that AI PCs will be key contributors to the next leg of PC market growth as penetration rises from 2 percent in 2024 to 65 percent in 2028.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said the strategic collaboration will enable Lenovo to further accelerate its ongoing transformation, enhance its global presence, increase geographic diversification of its manufacturing footprint, and capitalize on the growth momentum of the IT and business services industry in the Middle East and Africa region.

Last week, Lenovo, the world's largest personal computer maker, reported a 9 percent year-on-year rise in revenue in the quarter ending March, as the Chinese tech company pounces on AI-related opportunities.

Revenue for the January-March quarter hit $13.8 billion, beating an average estimate of $13 billion drawn from eight analysts according to LSEG data.

Its net income doubled year-on-year to $248 million, and non-PC revenue mix reached a historic high of 45 percent.

Lenovo said the performance showed that it has navigated the past year's industry downturn, captured tremendous growth opportunities presented by AI, and accelerated momentum across the business.